Security Bank raises P5.8 billion via LTNCDs

MANILA, Philippines — Listed Security Bank Corp. has raised P5.78 billion through the issuance of long term negotiable certificates of deposits (LTNCDs) on the back of strong demand from investors.

The country’s fifth largest bank was forced to exercise its oversubscription option as it was initially looking at raising P5 billion from the second tranche of the LTNCD program.

Security Bank’s debt paper with a tenor of five years and six months managed to secure pricing at the lower end of its range at 4.5 percent per annum.

Proceeds from the fund raising activity would help the bank manage its liabilities and ratios, while also expanding its funding and investor base.

LTNCDs have been an effective way for banks to raise cost-effective funding, while offering a new investment product to their own deposit base, most of whom are looking for long term assets that provide higher yields than traditional time deposits.

In October last year, the Bangko Sentral ng Pilipinas (BSP) gave Security Bank the green light to issue up to P20 billion in LTNCDs in one or more tranches.

Security Bank’s net profit slipped by 16.6 percent to P2.35 billion in the first quarter from P1.88 billion in the same period last year.

The bank said its profitability was affected by the 50 percent drop in trading gains, as well as the increase in provision for income tax by P 311 million.

Core revenue – comprising of net interest income, fee-based income, and trading gains attributable to customer flows – went up by 15 percent as net interest income grew by 13 percent to P5 billion.

Interest income from financial investments decreased as Security Bank reduced its securities portfolio by 11 percent year-on-year through securities sale.

Service charges, fees and commissions jumped by 45 percent to P683 million. The growth in fee income was broad-based, led by bancassurance, credit card and loan fees, the bank said.

Its loan book expanded by 20 percent to P367 billion. Corporate loan growth was 16 percent and middle market loan growth was 13 percent. Consumer loan growth accelerated to 54 percent.

With the rollout of small business loans and personal loans in early 2017, Security Bank now has a full plate of consumer loan products consisting of home, auto, credit card, personal, and small business loans, which helped net interest margin to be sustained at 3.3 percent in the first quarter.

Deposits grew by 11 percent to P420 billion with low-cost deposits increasing by 20 percent. The bank’s total assets stood at P703 billion.